Britain’s benefits system fuels a culture where people choose not to work and
risks losing public support unless ministers make a change, the coalition’s
pensions adviser has said.

Lord Hutton of Furness, who served under Tony Blair and was appointed by David Cameron and Nick Clegg to oversee an overhaul of public sector pensions, accused all parties of not making the fundamental welfare changes needed, according to The Times.

The cross-party figure said that governments have “lost the plot” over growing benefits costs.

He said: “We’re spending an absolute fortune every year on working-age benefits and no one feels the system is fair, reasonable, or supports the work ethic.

“We’ve got to turn this around because I don’t think the system is sustainable in its current form.

“Our welfare system really does support a lot of people who choose consciously not to work. I’m not saying it is the majority, of course it isn’t. But it does support that sort of culture and we’ve got to really strongly challenge that.”

Total spending on benefits and tax credits for working age adults is set to reach £91.2bn this year, according the the Institute for Fiscal studies.

The Labour peer said that under a new system, those who have not paid into social security should not receive the same level of support as those who have, whereas workers who earn a salary for a long time before losing their job could be paid more.

He said: “I don’t see what the buy-in is for someone on average wages paying into the welfare state.

“They get treated exactly the same way as the person who has never saved a penny and never tried to put anything in for a rainy day.

“I don’t want to see the rug pulled from under the welfare state, it is so important for fairness and cohesion. But very few people now think it supports the work ethic and we’ve got to address that.”

Lord Hutton also said that politicians must take welfare reform seriously or risk being ignored by voters.

He said: “This is not something that is on the options list for political parties

“If you aspire to govern, you’ve got to look at this issue and you have got to have some credible answers about how to contain spending and improve the fairness and efficiency of the system.

“I think the electorate will look very carefully at all of the parties’ policies on that score. We are getting to the point where very few people think the welfare budget is well spent. And that is a huge part of our national wealth.”

Lord Hutton also said he supported an independent review of welfare to force politicians to make serious changes.

“I would like to see a proper Royal Commission looking at these issues and try to take it out of the party political melee. We spend our time looking like we are doing reform, huffing and puffing and beating our chests, but we haven’t addressed the fundamentals.

“We have a highly expensive system that satisfies virtually no one, doesn’t support a modern, functioning labour market and treats the vast majority of decent folk out there the same as those that haven’t saved a penny.

“If you haven’t paid in, then get the same out as the person who has. But I think that is right in principle. We have just lost sight of some of the basic principles,” he said.